4 supranational sub sovereign and agency ssa bond

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4. Supranational, sub-sovereign and agency (SSA) bond : Bonds issued by international financial institutions (IFIs) such as the World Bank and the European Investment Bank (i.e. “supranational issuers”). SSA bonds have features similar to a corporate bond relating to “use of proceeds” and recourse to the issuer. Agency bonds are included in this category (e.g. issuance by export-import banks), as are sub-sovereign national development banks (e.g. the German KfW). 5. Municipal bond : Bonds issued by a municipal government, region or city. A national government entity could theoretically also issue a “sovereign” bond; no green sovereign bonds have been issued to date. 6. Financial sector bond : A type of corporate bond issued by a financial institution to specifically raise capital to finance “on-balance sheet lending” (i.e. to provide loans) to green activities (e.g. ABN AMRO or Agricultural Bank of China). This type of bond is considered separately for the purposes of OECD scenario modelling to retain a distinction between financial sector bond issuances which finance lending and those which directly finance green investments. BOX 6: GREEN BONDS COME IN SIX FORMS
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THE GROWING GREEN BOND MARKET . 13 The market evolved beyond SSA issuers in 2013 when corporate issuers joined the market, first with Bank of America’s “financial sector” bond, followed by EDF, Vasakronan and others. Corporates have also extended the green bond label to asset backed securities, starting with Toyota’s 2014 sale of securities with proceeds used for investment in electric vehicles and hybrids. The deal was backed by leases and loans to non-green vehicles, as the pool of leases and loans to EVs and hybrids was too small. Municipalities have joined the market, with the issuance by Ile de France (the Paris region) in 2012 followed by Gothenburg (Sweden) in 2013. The year 2014 also saw the first emerging market municipal issuance, by Johannesburg (South Africa). Export Credit Agencies and Export-Import Banks have issued green bonds including in India (India ExIM). The first covered bond issuance (Berlin HYP) occurred in 2015 along with further growth in ABS and project bonds. Green bond issuing entities can make use of a variety of structures related to the “use of proceeds” (according to the GBP, four “types” of green bond at present, although additional types may emerge). The most common structures used have been standard “recourse-to-the-issuer” debt obligations (i.e. if the principal is not returned to the investor in full for whatever reason, the investor can recoup unreturned principal from the issuer).While the use of funds is targeted, the repayment obligation is backed by all of the issuer’s assets. Most SSA and corporate green bonds are characterised by this “plain vanilla” issuance. Green bonds can also involve pledging specific cash flows as the basis for repayment (such as the revenue of a project), may be issued by a special purpose entity responsible for a specific project and without recourse to the issuer, or can be a securitisation with collateral from a collection of many assets. This structure is generally associated
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